Supply chain leaders need to understand the priorities of CEOs and translate them into implications for the supply chain organization in order to be successful, according to Gartner Inc. The key finding is the result of Gartner’s 2015 CEO and Senior Executive Survey that looked at top initiatives and challenges of top executives across six global regions and a range of industries.
Gartner’s study "2015 CEO Survey: Bimodal Balance Is Required for the Future of Supply Chain," also finds that while CEOs are more concerned about operational excellence, the primary role of the chief supply officer (CSCO) is bimodal, playing roles of “growth partner and operational caretaker.”
"As the CEOs' No. 1 focus continues to be growth, CSCOs' continued vigilance on operational risk and cost profiles is also a necessity. We continue to take the position that 'bimodal' — the ability to balance efficiency and cost takeout with growth-supporting capabilities — is the default orientation for successful CSCOs," said Michael Dominy, research vice president at Gartner, in a statement. "Now that the CEO has returned to a more balanced orientation, the need is greater than ever for the CSCO to be an active player in the profitable growth discussion."
While growth remains a top priority, according to survey respondents, there are a host of other concerns for CEOs including operational improvements and workforce-related issues.
"While growth still tops the list of top CEO strategic business priorities, our 2015 survey found that this has been tempered by a new focus on areas that have direct implications for a company's ability to grow profitably, namely operations improvements and workforce," said Dana Stiffler, research vice president at Gartner, in a statement. "These areas have made huge jumps on 2015 priority lists, tripling and doubling, respectively, their presence on CEOs' primary agendas. Sometimes, surviving a period of intense growth, or a period where growth is stymied by operational obstacles, can become the catalyst for the CEO to sit down with supply chain and operations leadership and make some changes, and this would appear to be the case for many CEOs today."
As a result, Gartner said supply chain leaders “are identifying and eliminating gaps between the CEO's and CSCO's perceptions of priorities and opportunities, and using the dual focus on growth and operational improvements to invest further in trade-off-making capabilities, such as sales and operations planning (S&OP), cost to serve and segmentation.”
Other issues include digital business models that call for CSCOs to keep abreast of technology in order to remain relevant. While CEOs’ technology investments focus on the front office, they also target operational areas including supply chain optimization and product cost, said Gartner, while “taking a more balanced view between growth and cost.”
This also means that supply chains need to take a balanced view with a focus on margin, not cost savings, when making decisions, said Gartner. This decision-making can be seen in the types of technology investments companies are making.
"CSCOs and other executives in industries that are highly dependent on effective supply chain management (SCM) should recognize and highlight the dependencies and impacts between various enabling technology initiatives," stated Stiffler. "For example, changes to customer experience management, the No. 1 priority investment, must be translated into action by supply chain and operations to deliver benefit. Likewise, digital marketing initiatives in supply-chain-dependent industries will underperform if they are not coordinated with supply chain."
Other significant CEO issues such as concerns around workforce should fuel the business case for talent and supply chain investment, said Gartner, considering that talent and skills were the top constraints ranked by CEOs with workforce twice as important compared to last year’s report.
Backing up this view is a recent survey conducted by Deloitte that indicates supply chain execs believe their companies lack the skills needed to evolve their supply chains using new technologies and operating models.
Gartner’s recommendation is that “CSCOs and senior supply chain leaders need to do a better job of illustrating how the supply chain organization enables the CEO's top priorities. Specifically, CSCOs need to show the talent contingencies between improved capabilities and growth and allocate resources to improve and retain these professionals, as well as recruit new staff.”
Gartner will cover these and other supply chain issues at the next Gartner Supply Chain Executive Conference 2015.